Table 1B. Comparison of OASDI Cost Rates, Income Rates, Annual Balances, and Combined Trust Fund Ratios for Present Law and Advisory Council Options With Reduced CPI*
|
Annual Balances (Tax Income - Cost)/Payroll |
|
Trust Fund Ratios (Assets/Annual Cost) |
|
|
|
|
|
|
|
|
|
PL PAYGO |
|
MTR |
|
MB PAYGO |
|
MB+ |
|
PL PAYGO |
|
MTR |
|
MB PAYGO |
|
MB+ |
| Year |
|
Proposal |
|
Proposal |
|
Proposal |
|
Proposal |
|
Proposal |
|
Proposal |
|
Proposal |
|
Proposal |
|
|
(2.3% Int) |
|
(2.3% Int) |
|
(2.3% Int) |
|
(4.645% Int) |
|
(2.3% Int) |
|
(2.3% Int) |
|
(2.3% Int) |
|
(4.645% Int) |
| 2000 |
|
0.98% |
|
1.16% |
|
1.27% |
|
2.79% |
|
192% |
|
193% |
|
196% |
|
221% |
| 2010 |
|
0.63 |
|
1.57 |
|
1.54 |
|
3.82 |
|
286 |
|
341 |
|
350 |
|
648 |
| 2020 |
|
-1.78 |
|
0.27 |
|
-0.36 |
|
0.84 |
|
236 |
|
413 |
|
377 |
|
903 |
| 2030 |
|
-0.28 |
|
-0.92 |
|
-2.21 |
|
-2.45 |
|
142 |
|
385 |
|
278 |
|
1008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2040 |
|
-0.37 |
|
-0.41 |
|
-0.05 |
|
-4.76 |
|
127 |
|
384 |
|
148 |
|
1104 |
| 2050 |
|
0.11 |
|
-0.18 |
|
-0.31 |
|
-6.49 |
|
116 |
|
417 |
|
152 |
|
1159 |
| 2060 |
|
-0.03 |
|
-0.53 |
|
-0.28 |
|
-7.92 |
|
109 |
|
430 |
|
121 |
|
1154 |
| 2070 |
|
-0.5 |
|
-0.7 |
|
-0.15 |
|
-8.52 |
|
102 |
|
432 |
|
101 |
|
1157 |
| 1995-2069 |
|
0 |
|
0.4 |
|
0 |
|
0.75 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proposal Provisions |
|
|
|
|
|
|
|
Annual Cost Rates (Cost/Payroll) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PL PAYGO |
|
MTR |
|
MB PAYGO |
|
MB+ |
|
MTR (Maintain Tax Rates) Proposal (=1.6% IA but w/o IA) |
|
|
|
| Year |
|
Proposal |
|
Proposal |
|
Proposal |
|
Proposal |
|
Increase NRA to 67 (2mos per yr) by 2011, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
index thereafter, keep EEA at 62. |
|
|
|
|
| 2000 |
|
11.66% |
|
11.69% |
|
11.58% |
|
11.58% |
|
Modify PIA formula : |
|
|
|
|
|
| 2010 |
|
12.07 |
|
11.61 |
|
11.66 |
|
11.91 |
|
Reduce the 0.32 and 0.15 factors in the formula |
|
|
|
| 2020 |
|
14.65 |
|
12.91 |
|
13.93 |
|
14.96 |
|
by 0.5 percent (multiply by 0.995) for 1998-2011, |
|
|
|
| 2030 |
|
16.84 |
|
14.15 |
|
15.98 |
|
18.09 |
|
by 1.5 percent (multiply by 0.985) for 2012-2030. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Factors for 2030 and later, 0.224 and 0.105 |
|
|
|
|
| 2040 |
|
17.01 |
|
13.59 |
|
16.26 |
|
19.44 |
|
Increase benefit computation years to 38 by 1999. |
|
|
|
| 2050 |
|
17.18 |
|
13.33 |
|
16.56 |
|
20.7 |
|
Change benefits for spouses of retired and |
|
|
|
|
| 2060 |
|
17.99 |
|
13.69 |
|
17.43 |
|
22.2 |
|
disabled workers to 33% of PIA. |
|
|
|
|
| 2070 |
|
18.5 |
|
13.87 |
|
17.97 |
|
22.99 |
|
Pay Surviving spouse MAX(ownPIA, spousePIA, |
|
|
|
| 1995-2069 |
|
15.11 |
|
13.03 |
|
14.61 |
|
14.92 |
|
75 percent of benefits payable to couple alive). |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cover new hire State and local after 1997. |
|
|
|
|
|
|
Annual Income Rates (Tax Income/Payroll) |
|
|
|
|
|
|
|
Tax benefits like other contributory pensions. |
|
|
|
|
|
|
PL PAYGO |
|
MTR |
|
MB PAYGO |
|
MB+ |
|
Phase out $25,000/32,000 thresholds. |
|
|
|
|
| Year |
|
Proposal |
|
Proposal |
|
Proposal |
|
Proposal |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PL PAYGO (Maintain about 100% Trust Fund Ratio) |
|
|
|
| 2000 |
|
12.64 |
% |
12.85 |
% |
12.85 |
% |
14.37 |
% |
Modify present law Payroll tax rate schedule: |
|
|
|
|
| 2010 |
|
12.7 |
|
13.17 |
|
13.2 |
|
15.73 |
|
|
12.4% 1995-2024 |
|
|
|
|
| 2020 |
|
12.87 |
|
13.18 |
|
13.56 |
|
15.8 |
|
|
15.4 2025-2029 |
|
|
|
|
| 2030 |
|
16.56 |
|
13.23 |
|
13.76 |
|
15.64 |
|
|
15.9 2030-2049 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16.5 2050-2059 |
|
|
|
|
| 2040 |
|
16.64 |
|
13.18 |
|
16.21 |
|
14.68 |
|
|
17.1 2060-2070 |
|
|
|
|
| 2050 |
|
17.29 |
|
13.15 |
|
16.25 |
|
14.21 |
|
|
|
|
|
|
|
|
| 2060 |
|
17.96 |
|
13.17 |
|
17.15 |
|
14.28 |
|
MB+ (Maintain Benefits+) Proposal (=MB with PSA revenue) |
|
|
|
| 2070 |
|
18 |
|
13.18 |
|
17.82 |
|
14.47 |
|
Cover new hire State and local after 1997. |
|
|
|
|
| 1995-2069 |
|
15.12 |
|
13.42 |
|
14.61 |
|
15.67 |
|
Increase benefit computation years to 38 by 1999. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax benefits like other contributory pensions. |
|
|
|
|
| MB PAYGO (Maintain Benefits PAYGO) Proposal |
|
|
|
|
|
|
Phase out $25,000/32,000 thresholds. |
|
|
|
|
| Cover new hire State and local after 1997. |
|
|
|
|
|
|
Redirect tax on benefits from HI to OASDI, phase 2010-19 |
|
|
|
| Increase benefit computation years to 38 by 1999. |
|
|
|
|
|
Invest 50% of assets in equities by 2015, (start in 2000) |
|
|
|
| Tax benefits like other contributory pensions. |
|
|
|
|
|
|
Multiply PIA factors (90, 32, 15 currently) by 1.0062 |
|
|
|
| Phase out $25,000/32,000 thresholds. |
|
|
|
|
|
|
each year 1999 to 2038 (115.2, 41.0, 19.2 for 2038+) |
|
|
|
| Redirect tax on benefits from HI to OASDI, phase 2010-2019. |
|
|
|
|
|
Raise payroll tax by 0.76 each for 1998-2069. |
|
|
|
|
| Modify present law tax rate schedule: |
|
|
|
|
|
|
Borrow from Treasury same amount as for the PSA proposal, |
|
|
|
| 12.4% for 1996-2039, 14.8% for 2040-2059, 15.6% for 2060-2069, |
|
|
|
|
|
beginning 2002, and repay Treasury by end of 2069. |
|
|
|
|
|
16.2% for 2070. |
|
|
|
|
|
|
|
|
|
|
|
|
|
| * Based on intermediate assumptions from the 1995 Trustees |
|
|
|
|
|
|
LTR (Lower Tax Rates) Proposal (=5% PSA but w/o PSA) |
|
|
|
| Report, except that CPI is assumed to be reduced by 0.1% |
|
|
|
|
|
|
(see Tables 1A and 1C) |
|
|
|
|
|
| for the December 1996 COLA and by 0.21% for December 1997 |
|
|
|
|
|
|
|
|
|
|
|
|
| and later COLAs. Nominal interest and wage are unaffected. |
|
|
|
|
|
|
Office of the Actuary / Social Security Administration |
|
|
|
| Real interest rates shown in () do not reflect change in CPI. |
|
|
|
|
|
|
July 28, 1996 |
|
|
|
|
|
|
www.socialsecurity.gov